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April 2, 2013$3 Million Retaliation Verdict Reversed by Tennessee Court of Appeals

The Tennessee Court of Appeals has reversed a jury's $3 million damages award to an employee who claimed unlawful retaliation under Title VII and the Tennessee Human Rights Act, and the Court has ordered the employee's claims to be dismissed. The decision was filed on March 28, 2013, by the Tennessee Court of Appeals, Middle Section, in Ferguson v. Middle Tennessee State University.

In its decision, the Court of Appeals plowed some new ground under Tennessee law, and the decision could have implications in discrimination cases, as well as retaliation cases.

In Ferguson, the employee was a University maintenance worker who believed that his supervisor discriminated against him on the basis of race and his Japanese ancestry, so he filed an EEOC charge and a discrimination lawsuit. Afterward, he claimed that he was made to perform difficult physical tasks which exceeded certain medical restrictions, and he was eventually injured while performing the tasks. He then filed a second lawsuit alleging retaliation because he had engaged in protected activities.

The trial court consolidated both cases for a single trial. After an 8 day jury trial, the jury returned a verdict awarding the employee $3 million in damages on his retaliation claim (but nothing on his discrimination claim).

On appeal, the University argued that there was no proof that the supervisor who assigned the employee's work-load had knowledge that the employee had filed an EEOC charge or a discrimination lawsuit. At trial, the employee explained that he had not discussed these matters with anyone, on instructions from his attorney and the University's Human Resources Department. There was no direct or circumstantial proof that the supervisor was aware that the employee had engaged in these protected activities.

Because of this, the Court of Appeals ruled that the employee's retaliation claims must fail, as a matter of law. The Court noted that a required element in a retaliation claim is that "the exercise of the plaintiff's rights was known to the defendant." The employee argued that (1) "temporal proximity" between the time of the EEOC charge and the extra work assignments created an inference of causation and retaliatory intent, and (2) regardless of whether the supervisor knew about the protected actities, his employer, the University, clearly did know about them. The Court of Appeals rejected both arguments.

First, with respect to the effect of "temporal proximity," the Court noted that the inference of causation and retaliatory intent which may arise on account of temporal proximity "presupposes... that the decisionmaker... has knowledge of the employee's protected activity at the time the adverse job action is taken. Absent such knowledge, there is no way to infer retaliatory animus from the decisionmaker's actions.... proof of knowledge of the employee's protected activity is foundational to a claim of retaliation for engaging in protected activity."

Second, in a holding which should also impact discrimination cases, the Court of Appeals rejected the notion that "corporate knowledge" of the employee's protected activity is sufficient to establish a prima facie case of retaliation, even where there is no proof that the individual descionmaker had knowledge. In language which will no doubt be cited by employers' lawyers in future pleadings and briefs, the Court said, "Retaliatory intent or animus must reside in the mind of a living, breathing person. It is difficult to see how an entity such as a corporation can have intent or animus, retaliatory or otherwise."

In the end, the employee's $3 million verdict was overturned, and the case was remanded for dismissal.

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